Origination

Issuance of Ginnie Mae mortgage-backed securities fell 24% to $22.8 billion in March with consumers taking a more cautious approach to the housing market. It marks the third monthly decline in Ginnie MBS issuance, which is down 46% from December. Issuers used Ginnie Mae execution in March to securitize $22 billion of government-guaranteed single-family loans and $828 million of multifamily loans. Issuance of MBS backed by FHA-insured reverse mortgages totaled $751 million, down from $1.45 billion in February.

A senator from New York where several credit unions were victims of the $140 million U.S. Mortgage/CU National Mortgage fraud is calling on Fannie Mae's regulator to engineer a settlement on the disputed claims. In a letter to Edward DeMarco, director of the Federal Housing Finance Agency, Democrat Charles Schumer urges the agency and Fannie Mae to "work with the affected credit unions to come to a fair resolution of this dispute that does not threaten the viability of the credit unions." Schumer noted, "Ultimately, I am concerned about the fiscal well-being of thousands of my constituents who may suffer adverse financial impacts" because of U.S. Mortgage Corp. "The magnitude of this potential loss will have a significant adverse impact on these credit unions and their members, some of whom are employees of the U.S. government, as well as state and local governments." Schumer declined requests for further comment. The congressional intervention comes as Fannie Mae has begun mediation with several of the credit unions aimed at settling the dispute. Several New York credit unions, including Suffolk FCU, Sperry Associates FCU and TCT FCU, were among 28 credit unions that had their mortgages fraudulently sold to Fannie Mae by CU National president Michael McGrath. McGrath has pleaded guilty to the fraud and is scheduled to be sentenced next month.

The PMI Group, a top-ranked mortgage insurer, posted another large quarterly loss but is seeing some signs of improvement in its defaults. The California-based MI lost $157 million in the first quarter, a 36% increase from the loss suffered a year ago. But it said loan defaults fell to 147,248 on March 31, compared to 150,925 at yearend. With its defaults improving, PMI hopes to raise $600 million through the sale of stock. Analysts at FBR Capital Markets view the proposed capital raise by the company as a positive, saying, "It would significantly reduce the company's capital and liquidity pressures."

With the credit crisis-including a dearth of warehouse financing-beginning to ease, there are new signs that the buyers of freshly originated mortgages are becoming less stingy on what they pay for loans sold "servicing released." According to Glen Corso, managing director of the Community Mortgage Banking Project, a month ago servicing-released premium prices hit an all-time low. But lately, prices have improved. His nonbank members are reporting an improvement due to rising rates. "One member told me that the improvement came at a time when the increase in mortgage rates from below 5% to above 5% took place," said Mr. Corso, who heads up the fledgling trade group. (For more details see the Monday print edition of National Mortgage News.)

Sen. Richard Shelby, R-Ala., is confident his fellow Republicans will vote "en block" Monday evening, preventing the Senate from starting debate on the financial services reform bill. "I believe the 41 Republicans, for right now, will stand together," Sen. Shelby told a meeting of the Independent Community Bankers of America Monday morning. If the GOP can hang together, Shelby said, it will give him a stronger hand in negotiating with Senate Banking Committee chairman Christopher Dodd, D-Conn., on a compromise bill. To prevent bailouts, Shelby wants tighter limits on Treasury and Federal Reserve lending to failing financial institutions. He also wants prudential banking regulators to have more "say" over the activities of a new independent consumer protection agency, which likely will be given sweeping powers over mortgage lenders. Dodd is now working with Shelby but wants the bill to reach the floor soon, so the amendment process can begin. Negotiations with Republicans have been ongoing for months. Dodd estimates there are only 40 to 50 legislative days left this year to pass a bill. The Republicans are wary of the amendment process, however, and want a compromise hammered out in advance of floor debates. If the reform bill passes the Senate, Shelby warned the bill could be in "peril" if changes are made in a conference with the House. The House passed its reform bill in December. Differences in the two bills are usually worked out in a House-Senate conference.

Capital One Financial Corp., a player in both credit cards and mortgages, reported its third straight quarterly profit on lower credit costs. The $200.7 billion-asset McLean, Va., company earned $636.3 million in the first quarter, compared with $375.6 million in the fourth quarter and a $172.3 million loss a year earlier. The provision for managed loan losses fell 20% from the fourth quarter and 30.7% from a year earlier, to $1.48 billion. Capital One's commercial banking operations had a loss of $49.5 million, narrowing from a loss of $136 million in the fourth quarter. The consumer banking business earned $305.4 million, compared with a loss of $7.7 million a quarter earlier. The Capital One group of companies includes the Chevy Chase Bank, and B.F. Saul Mortgage franchises.

Silvergate Bank of California extended warehouse credit of $209 million in the first quarter, a year after launching the program. The La Jolla-based bank said the lines of credit helped its nonbank customers fund 745 mortgage loans during the period. Silvergate said its first quarter performance represented about two-thirds of all the loans funded since it entered the business. Silvergate had net income of $632,000 in the first quarter, up 63% over the previous year. Meanwhile, a reduction in the average balance of mortgage warehouse loans to a more historic level has resulted in lower interest income at Horizon Bancorp, Michigan City, Ind. For the quarter, the company had interest income of $16.1 million, down from $18.7 million for the same period in 2009. Net income at Horizon was $1.8 million, down from $2.6 million in the first quarter of 2009. As of March 31, 2010 Horizon had $96.3 million of mortgage warehouse loans on its balance sheet, down from $166.7 million as of Dec. 31, 2009 and $186.1 million as of March 31, 2009. None of its warehouse loans are non-performing or categorized as real estate owned, Horizon added.

First American Corp. is buying Experian Information Solutions' 20% stake in First American Real Estate Solutions LLC for $314 million. First American, Santa Ana, Calif., is exercising a purchase option it holds. The deal will close at yearend. "Experian has been a valued partner in the FARES joint venture and we look forward to furthering our working relationship with them in the coming years," said Parker Kennedy, chairman and chief executive of First American. "Our exercising of the purchase option, combined with our previously announced transactions for the non-controlling interests in First Advantage Corp. and First American CoreLogic, provide us with control over substantially all of our assets as well as provide the Information Solutions Group with increased financial and operational flexibility as it prepares to be a stand-alone public company."

Fannie Mae and Freddie Mac seller/servicers originated 85% of all multifamily mortgages in 2009, according to an annual survey by the Mortgage Bankers Association. The survey found that "dedicated" commercial real estate finance firms originated $82 billion in CRE and multifamily mortgages last year. Multifamily originations totaled $36.5 billion or 44% of CRE lending. Fannie lenders originated $15.9 billion of the multifamily loans and Freddie lenders originated $15.2 billion. Originations of Federal Housing Administration-insured multifamily loans totaled $5.9 billion, up 168% from 2008. MBA said 75 of the respondent firms that also participated in the 2008 survey reported their loan volume was down 46%. "Relatively few commercial mortgages were made in 2009, as the recession curtailed both the supply and demand for new mortgage debt," said Jamie Woodwell, MBA's vice president of CRE research.

New home sales jumped 27% in March as the start of the spring home buying season got an extra kick from the soon-to-be expired homebuyer tax credit. Sales increased across all regions, most notably in the South (up 43.5%) and the Northeast (up 35.7%). The U.S. Census Bureau reported that sales of newly constructed homes rose to a seasonally adjusted annual rate of 411,000 in March from 324,000 in February, which was one of the lowest readings in the past 20 years. (The February rate was actually revised upward by 16,000 units.) The March home buying surge pushed the inventory of unsold new homes down to a 6.7-month-supply -- the lowest since December 2006. In that year, 536,000 newly completed homes were on the market compared to 228,000 today. Despite the depressed levels of activity, the National Association of Home Builders is pleased with the report. "It shows the homebuyer tax credit is working," said NAHB senior economist Bernard Markstein. But he noted it is pulling sales forward. "April will probably be good, but not as good as March and then there will probably be a drop-off with the tax credit going away," he said. Buyers have to sign a sales contract by April 30 to qualify for the tax credit and complete the closing by June 30.